The Financial Intelligence Unit India (FIU-IND) has issued show cause notices to nine offshore cryptocurrency and virtual digital assets service providers (VDA SPs) for not being compliant with the requisite provisions of the Prevention of Money Laundering Act (PMLA), and has asked the Union Information Technology ministry to block their web addresses, the Finance Ministry said late Thursday. The ministry termed the notices as “compliance action”. The nine VDA SPs include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global and Bitfinex. FIU-IND is the national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs. The agency is under the Finance Ministry. “Director FIU IND has written to Secretary, Ministry of Electronics and Information Technology to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act in India,” the Finance Ministry said in a release. Offshore as well as onshore VDA SPs operating in India and engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets, are required to be registered with FIU-IND as reporting entities and comply with obligations under the PMLA. These requirements are “activity-based” and not contingent on physical presence in India. “The regulation casts reporting, record keeping, and other obligations on the VDA SPs under the PML Act which also includes registration with the FIU IND. Till date 31 VDA SPs have registered with FIU IND. However, several offshore entities though catering to a substantial part of Indian users were not getting registered and coming under the Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework,” the Finance Ministry said. VDA SPs were brought under the ambit of the AML-CFT framework under the PMLA in March 2023. Under the anti-money laundering law, reporting entities are required to maintain KYC details or records of documents evidencing the identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients. Under the Income Tax Act, reporting entities are required to file statements of financial transactions (SFT) with the tax department containing details of certain financial transactions or any reportable account maintained by them during the year. Earlier this month, Minister of State for Finance Pankaj Chaudhary had informed the Lok Sabha that necessary action will be taken against offshore platforms for non-compliance with the requirements under the PMLA. With agency inputs
Govt issues PMLA notice to Binance, 8 other offshore crypto firms, asks IT Min to block URLs
